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Firms ‘in state of denial’ over Dodd-Frank Act

Many finance and family offices professionals are in a state of denial over the imminent implementation of the Dodd-Frank Act, according to the IMS Group’s Jonathan Wilson.

Many finance and family offices professionals are in a state of denial over the imminent implementation of the Dodd-Frank Act, according to the IMS Group’s Jonathan Wilson.

Figures from the professional financial services group show that three-quarters of non-US based finance professionals working in the alternative investment industry are unprepared for the Dodd-Frank Act.  

The majority of 100 delegates, made up of hedge fund managers, private wealth managers and private equity firms, questioned at a recent IMS conference were worried about the forthcoming legislation.

To be in compliance with the act, which is primarily aimed at regulating hedge funds, firms have until the end of March 2012 to register with the US Securities and Exchange Commission, although some exemptions have been made.

“Many firms remain in a state of denial about the requirement or at best are focusing on the requirement after the summer,” said Wilson, who is director of project consulting at IMS and head of company’s new SEC consulting and registration service.

“There are firms that still need to establish whether they will need to register fully with the SEC or can take advantage of an exemption.”

Family offices have traditionally not had to register with the SEC, but under the new rules, family offices that offer advice to outside clients or those not fully owned by the family need to sign up.

Wilson said family offices that do not fall under the SEC’s definition should consider whether to register with the regulator or take advantage of another SEC exemption, such as the private fund adviser exemption.

The new regulations are already having an impact on hedge funds – just last month, it was announced that George Soros’s hedge fund would be closed to outside investors. Soros’s sons Jonathan and Rob said it would instead be converted into a family office in a bid to avoid registering with the SEC.

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